As outlined in our earlier Insight article, Advantages of Offshore Companies, there are many benefits for you to consider when choosing to move your business to a different country. One of which being the best location to incorporate your new company.
Panama has been a very popular jurisdiction for offshore companies for decades, and it has the economic, political, and geographical elements that make it one of the best choices for corporations looking to expand.
But is it the right choice for the future of your business affairs?
Here we have provided you with a list of the most common questions, with the answers, that our prospective clients ask when considering Panama as the home for their offshore corporation.
Most used legal entities?
- Private IBC Corporations (Sociedades Anonimas) and Private Interest Foundation in Panama (Fundaciones de Interes Privado). These are also the most preferred options for those wishing to make international transactions.
Local Corporation Law?
- Law 32 of 26 February 1927 on Corporations, complemented by Decree Law No. 5 of 2 July 1997.
- Law 25 of June 12, 1995 for the Panama Private Interest Foundations.
What is the method of incorporation?
- There is no minimum level of paid in capital and deadline in which capital must be paid up.
What is the process to incorporate a Panamanian company and how long does it take?
- Once you have selected your service provider, who will also serve as Resident Agent which is a requirement by law in Panama, to form your Panamanian corporation they will proceed to draft the Articles of Incorporation which are authenticated by a local notary and registered at the Panama Public Registry of Articles. Most service providers will require a prospective client to undergo and complete a due diligence process.
- The chosen name for the company will be checked for its availability on the Public Register and it must also contain a suffix such as S.A, Inc, or Corp.
- A minimum of three Officers (President, Secretary and Treasurer) and Directors, who can also be the Officers, must be appointed to serve on the corporation executive board and they may be Panamanian or foreign and can live anywhere in the world. They must be of legal age and their names will be made public on the register. Nominee Officers and Directors can be appointed if full or partial anonymity is required and there are no nationality restrictions on whom is appointed.
- The matter of ownership must be decided and proportion of shares owned if by multiple shareholders. Details of shareholders are not made public.
- Usually, the process to incorporate a Panamanian company takes four to five business days.
Can Topaz Services provide Nominee Officers and Directors for my entity?
- Yes. There are many advantages to be gained when appointing local Nominee Directors which is more fully explored within one of our Insights articles. Fees for our nominee services are available on request.
What is the process for making changes to a Panamanian Corporation?
- It takes up to five business days to make any changes to a Panamanian corporation´s name, Officers and Directors or a Panamanian foundation´s council members. All changes are recorded at the Panama Public Registry.
What are ready-made, or “shelf”, companies in Panama? Are they legal?
- A ready-made, or Shelf Corporation is a company that has not run any commercial activity and has been created to be sold to a client for legitimate purposes that requires a corporation with history. Such corporations can offer some advantages that a client may be in need of when opening bank relations or engaging in business contracts. They are perfectly legal and are available. Changes to details such as company name, officers and directors and foundation council members take between three to five business days.
What are the costs to incorporate a Panamanian company, excluding government fees?
- In comparison to other jurisdictions, Panama is very competitive. As every client’s needs differ, we would recommend you contact us for an accurate quote.
What are the annual government fees for a Panamanian corporation and a Panamanian Foundation?
- US$ 300 (Annual Franchise Tax), for corporations, irrespective of the level of the authorised share capital and US$400 for a Private Interest Foundation in Panama.
What are the corporation tax rates in Panama for offshore companies?
- We explore this more fully in other Insights articles however the general rule of thumb is that there is no taxation of a Panamanian Corporation´s business activities and transactions carried outside of Panama and no tax on any foreign sourced income.
Is it required for a Panamanian corporation to have a registered office in Panama?
- No. it is only compulsory for a corporation to have a resident agent in Panama, which can only be a local Lawyer of Law Firm.
Can Corporate Directors be appointed?
- Yes. Corporate entities from any where in the world can be appointed.
How often should shareholder and board meetings be held?
- The frequency for shareholder and board meetings is established within the corporation´s Articles of incorporation. These may be held anywhere in the world and there are no periodic meetings required by law.
What are the financial reporting requirements for a Panamanian corporation or foundation?
- There are no requirements for Panamanian offshore companies or Private Interest Foundation in Panama to submit annual returns. Only corporations operating within Panama must provide annual reports. However, as per Law 52 of 2016, accounting records may be required for submission on request. For Panamanian offshore companies and Private Foundations, financial statements do not have to be audited. We explore this topic more fully in our Insights article “There’s no accounting for Haste”.
I have an existing company in another jurisdiction. Can I transfer it to Panama?
- Yes. Migration of foreign companies and Private Foundations to Panama is permitted.
All of the above answers were correct at the time of writing this article.